The Scoop
A group of Senate Democrats on Monday demanded that FCC chairman Brendan Carr probe the foreign money funding Paramount’s planned takeover of Warner Bros. Discovery, according to a letter viewed by Semafor.
“This constellation of foreign investment from China and from Gulf states, with complex and sometimes competing relationships with the United States, demands rigorous, not perfunctory, review,” Minority Leader Chuck Schumer of New York, Minority Whip Dick Durbin of Illinois, and Sens. Cory Booker of New Jersey, Richard Blumenthal of Connecticut, Mazie Hirono of Hawaii, Sheldon Whitehouse of Rhode Island, and Elizabeth Warren of Massachusetts wrote.
Paramount bested Netflix with a $111 billion bid for Warner Bros. earlier this month. About $24 billion of that comes from Abu Dhabi, Qatari, and Saudi sovereign wealth funds.
The way the deal is currently structured prevents them from exercising influence over the governance or management of the combined company. But their sizable equity checks — combined with a Bloomberg report that Tencent, the Chinese tech giant, was in renewed talks to make its own investment alongside the Ellisons, who control Paramount — are making lawmakers worried about Warner-owned CNN’s ultimate fate.
“Paramount’s representations that these investors will hold no governance rights demand careful independent verification. Even as non-governing partners, their massive investment creates significant opportunity for soft power and influence over CNN’s editorial decisions and business priorities,” the senators wrote.
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Investors in recent days have fretted about the Paramount bid’s footing. The company’s shares have tumbled 30% this year, an indication not just of the pressure on the bid itself — political and regulatory — but also around the Ellisons’ ability to fund that bid: Their wealth comes almost entirely from shares of Oracle, which are down 23% in that same time.
State attorneys general are already restive about another entertainment deal, the DOJ’s proposed settlement with Live Nation. Still, several have already suggested that any deal for Warner Bros. would face similarly intense scrutiny, given the studio’s massive number of employees and outsize cultural influence.
While US federal antitrust regulators have signaled there will be a lack of significant opposition to the deal, Paramount will still face a review in Europe — where the company possesses several sports rights and licenses that regulators are likely to look at closely, to say nothing of the potential politicization of a review process.